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tv   [untitled]    June 5, 2011 7:30pm-8:00pm PDT

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supervisor chu: welcome to the expanded budget and finance committee meeting. do we have any announcements today? >> yes, please turn off all cell phones. if you wish to speak during public comment, please fill out a speaker card and an them in to myself. if you submit documents to the committee, please provide a copy to the clerk for inclusion into the file. items acted upon today will appear on the border supervisors' agenda on june 2, 2011, unless otherwise stated -- the board of supervisors' agenda. item one, resolution authorizing the office of
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contract administration to enter into the first amendment between the city and en pointe technology sales in which the amendment shall increase the contract amount from $24 million to $28 million an update certain standard contractual clauses. >> we are requesting to increase the contract from $24 million $28 million for information technology products. i am here to answer any questions. supervisor chu: would you speak more about the proposal for the benefits of members of the public who may be watching? >> the resolution is for a product-only contract with en pointe. expenditures average $775,000 per month since january 2009 when the contract was entered into. the contract is capped at $24 million. expenditures are projected through the end of the contract
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in december to reach nearly $27.9 million. this contract is part of the technology store, which is made up of four vendors for services, three vendors for products, and a pilot program consisting of seven micro lbe set aside contracts for small local businesses set aside by hrc. there's no set scope of work, and city orders work on an as- needed basis. funding provided by individual department budgets, which are approved by the board of supervisors in annual budget process. the correct contract term ends december 31, 2011, and it also has options to extend up to two years. supervisor chu: thank you very much. we have a budget analyst report on this item. >> madam chair, and members of the committee, based on our review and analysis, this requested $4 million increase of
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expenditure authorization is justified based on the actual and projected expenditures in order to keep the contract in place through its ending term of december 31, 2011. as the department indicated, all expenditures would be subject to separate appropriation approval by the board of supervisors. we recommend that you approve this resolution. supervisor chu: thank you very much. why don't we open up for public comment? are there and it -- any members of the public who wish to speak on this item? seeing none, public comment is closed. can we move this forward without objection? thank you. i know that supervisor mirkarimi is interested in participating in the conversation, so why don't we skipped over to item 3 first? >> item 3, resolution determining and declaring that the public interest and
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necessity demand repaving and reconstruction of roads, the rehabilitation and seismic approve of st. structures, the replacement sidewalks, the installation and innovation occurred rams, the redesign of street kids to look for a pedestrian and bicycle safety improvements, and the construction, rehabilitation, and renovation of traffic infrastructure and the payment of related costs necessary or convenient for the foregoing purposes -- finding that the estimated cost of 2400 million dollars for such improvements is and will be too great to be paid out of the ordinary annual income and revenue of the city and county of san francisco and will require incurring bonded indebtedness. supervisor chu: thank you very much. i believe the director of dpw wanted to be here to present for this, but unfortunately, he had a conflict. however, we do have someone stepping in in his stead. i believe he is at gao and is heading over, so we will give him a bit of time.
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>> fortunately, it was not a long trip. i am the manager of finance, the budget, and performance at the department of public works. we have a power point presentation today. all right, i am ready to go. we are here today to talk about
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the proposed $248 million general obligation bond. before you today is the resolution of public interest and necessity, which is necessary before this bond can go forward to the voters. in a few weeks will be the actual ordinance calling for the bond election, and that is where the final decisions about what the bond will consist of will be made. i want to talk through a little bit about why we're here and why we are talking about bond financing for the streets. early in my tenure at public works, before 2006-2007, we were having a crisis in our funding of streets and right of way programs and all the spending about $17 million a year. since that year, our funding has gone up to about $40 million a year on average from all
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sources, and that has been enough funding to stave off the decline in the condition of our streets. we have been pretty much holding steady in the condition of streets for the last four years. before that, we were seeing a steady decline over the previous years. since 2006-2007, we have had funding that has come in to us from a large general fund supplemental appropriation in 2006. we have gotten state bond money, state general obligation bond money, which provided an influx, and we got quite a bit of arra money, the federal stimulus money. in addition, as those forces were running out, and they were really one-time kinds of sources in many cases, the city's capital plan recommended general
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fund or gas tax-supported debt. we have done two rounds of cop issuances, and those absurd to maintain the quality of streets in san francisco and prevent us from what we say is kind of falling off the cliff where the streets begin to deteriorate much more quickly and they become much more expensive. this is a chart that shows -- you can see pretty dramatically in the early years how we were falling below the line that we needed to be back in order to improve the condition of our streets, and then we have seen funding kind of increase. this bond, if you look back fiscal years 2011-2012, 2012- 2013, and 2013-2014, will provide with other resources that are available to us to keep us on track to improve the condition of our streets.
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after the three years that this bond provides, the capital plan calls for a long term dedicated funding source, and i will talk a little bit about that later. the former mayor and the president of this board of supervisors convened a street resurfacing finance working group as a subcommittee of the capital planning committee, which included members outside the city family, the chamber of commerce, spur, and a number of other organizations that work along with city staff from public works, the mta, capital planning, to come up with a number of alternatives for a long-term source, but we are not there yet. in order to insure that we're continuing to do the work we need to do on the streets, we believe and the capital plan believes that a general obligation bond is necessary.
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so i'm going to talk a little bit about why we are proposing go bond for streets at this time. we believe >> -- we believe -- supervisor wiener: just a question. to be clear, without this bond, what is the anticipated annual spending in the next couple of years? about $20 million? >> it is in the range of about $25 million. >> that is cutting it basically almost in half what we have been spending. and that it is in half of what we have been spending and less than half of what we are proposing to spend. supervisor wiener: so the roads will start to deteriorate again? >> yes, we anticipate -- right now, and i do not know if you are all familiar with -- we have a pavement condition index, and
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we actually go and measure the condition of every street in the city. we have nearly 12,000 street segments, and we score it on a scale of 0 to 100, and we have a pavement conditions for right now of 63, which is considered fair. in just three years, it's the bond -- of the bond is not approved, the average score will go down to 61, so we are actually going to start seeing deterioration of the streets. as i'm going to mention, frequently, if we do not intervene now and prevent that kind of deterioration, bringing them back up, doing a repaving job is much more expensive. >> i think our score in the early 1980's was somewhere in the 80's. is that right? >> that is right. supervisor wiener: so we have seen a dramatic deterioration in the last 30 years. >> we have.
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honestly, it is a problem across the state of california, but san francisco has been doing a very good job in maintaining the conditions of streets. we just stop prioritizing it as a city in the last 15 or 20 years. supervisor chu: on the graph, it shows a pretty significant decline, i think, in sales tax going toward the funding of street resurfacing. i imagine that is just the changing of the programmatic details about what can be spent in the new prop k. >> it is two things that happen. under prop b, we were getting between $13,000,000.13000000 dollars a year, but when the sales tax was weak --
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reauthorize as prop k, the annual amount dropped to $4.8 million -- we were getting between $13 million and $15 million a year. to prevent us from falling off a cliff then, we actually accelerated some of the money for three years from prop k, and it means that going forward, we only have about $3 million a year from the sales tax because of that acceleration. supervisor chu: with the recent passage of the $10 per vehicle fee, we have integrated into these projections about available funding? >> that is $2.5 million a year, and that is included here. street resurfacing is receiving -- is slated to receive half of the. vehicle registration fee funds, only about $2.5 million a year.
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so we believe that the proposed general obligation bond is a short-term, fiscally responsible solution, which will spread the cost of fixing our infrastructure over the life of the assets. in san francisco, street maintenance -- and when we say maintenance, we need packaging and bottling -- reached -- we mean patching and potholing -- street repaving is a capital improvement and our streets have a useful life of between 20 years and 30 years, said debt financing for street repaving is, we believe, a very sensible fiscal policy because of the fact that if we fail to make investments now, the costs are going to be much higher. not in the long term, but in the near term.
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supervisor wiener: i really would like some more explanation. i agree with you. i think it is completely appropriate to do this capital work using bonding, but there is a notion out there shared by at least some people in the electorate and some of my colleagues, that it is -- that everything relating to streets -- everything -- has to be paid for from the general fund. it is just an ordinary, ongoing expense, and it is completely inappropriate to pay for it by avon. no matter what kind of street work is, it has to be only paid for through general fund. i am seeing a little extreme, but that is the notion. isupervisor elsbernd -- i know if supervisor elsbernd was here, he would disagree with you.
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i agree with you but i want us all to understand the minutia of the argument. >> i would say first, the tax and accounting view of what a capital investment is really focuses on the useful life of the asset. all of our assets, whether they are facilities, park facilities, general hospital, have to have a useful life that is going to be in excess of 20 years, essentially. the street reconstruction repaving work that we do meets that criteria. secondly, i do not know of any jurisdiction in the country, in the state of california or anywhere else in the country, that funds its street
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improvements and we are proposing here, through general funds. there are always other kinds of funding sources that are used. gas tax, dedicated sales tax, personal taxes -- parcel taxes. we have been doing research on general obligation bonds, which is what we are proposing here. outside of the state of california, almost everybody uses street improvements for obligation bonds. seven of the foulargest cities n the country all views general obligation bonds for street resurfacing. the three cities on that list are all in california. los angeles, san diego, and san jose. the reason these california cities are not using go bonds is
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not of they are not and of corporate capital expense, but because there is a higher voter threshold in california and then there is an oscar in the country. it is very difficult in california to get general obligation bonds passed for anything. until the state voters change the threshold for schools, school bonds across the state were failing to get two-thirds vote. the constitution was amended to allow those bonds to be approved with 55% voter support. so almost everywhere we look, this is a common way to fund our capital assets that do have a long life. and we will continue to talk about how the capital plan, that
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the board of supervisors adopted, talks about what capital assets are and segregates those things from those things in the city operating budget. these kinds of st. capital costs are part of that. they are different from operations of maintenance. from cleaning our streets, repairing potholes, filling cracks. supervisor chu: if i could ask you to expand and what you would consider categories of the operation versus investment. i think there could be a gray area where -- the slurry ceiling, is that capital gains were court an ongoing investment? that is something that i had trouble grasping. if what we're saying is we are reconstructing the entire street, i could make the argument that when we do that, is a likely, a huge capital
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investment, costs a lot of money, last 20, 30 years, and makes sense from a financial point of view, but for things like building the cracks, is that something that you would include in this bond? if it is, why would we not cover that in our ongoing need network? -- maintenance work? >> there are four categories of street repaving work that we're looking at. one is, as you said, street reconstruction. that is where we have failed to do ongoing maintenance of the street and have failed to make capital investments to preserve the life of the street. so those blocks that have fallen apart, you know -- concrete is spending up, buses are rolling over pot holes. you are right, it is obviously a
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capital investment. it costs upward of five $1,000 per block, and we have 11,000 blocks in the city. the second thing we tried to do is what we tried to do to prevent streets from getting to the point where they need that major reconstruction. we called it resurfacing for repaving. that is where we grind off the top two inches of asphalt and replace it with new as all -- asphalt. those streets that are fairly simple, about $70 -- $70,000 to $90,000. those streets have a useful life of 20 to 30 years, depending on the level of traffic. supervisor chu: so that extends a st.'s useful life 20 years? >> in some cases, on little-used
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streets, they do not need to be reserved for 40 years. what really impacts the street is heavy vehicular traffic. then we are doing what mtc and their pavement management program requires, that we spend a certain amount of money on preventive maintenance, not maintenance. that is where we get into slurry sealing and crack sealing. if those things are done at the right time of the life cycle of the pavement, greatly extends the life of that asset. if we do the salary ceiling -- slurry sealing, then we will not need to do crack ceisealing.
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all of those are considered capital assets, and they are all, i have to tell you, extremely good practices, in terms of minimizing the city's investment in its infrastructure. supervisor chu: and how doelong, for example, does a slurry seal extend the life of the street? >> 20 years. and it is a very cost-effective treatment. part of the entire life cycle of the pavement requires us to do that kind of treatment and it is the same with a building, supervisor. we might build an entirely new
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building, an entirely new hospital, like general hospital, or we might be replacing roofs. that will last many years and is protecting the asset. even though it is not protecting the entire building, it is considered a capital improvement. should i move on? the road repaving and resurfacing bond before you is designed to invest in the san francisco right-of-way infrastructure, providing funding source for the next three years, and is also funding our sidewalk and curb ramp improvements that are part of our americans with disability act transition plan. the condition of streets in san francisco, that pti score, in
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three years will be moving up from 64 to 66, and be putting us on track to 70, which is good, as opposed to fiaair, in 10 years. this book create more than 1600 jobs in san francisco and we will be distributing the project equitably throughout neighborhoods. that language, for both the paving and streetscape improvements in the bond, is included in york mets come before you in a few weeks. something that this bond will not do is increase property tax rates for san francisco property taxpayers. we will be issuing new bonds only if all the bonds are
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repaid, only to ensure we do not have any property tax rate increases. the size of the bond in the capital plan, because the capital plan has made this commitment, the size of the bond was designed to meet this policy set forth in the capital plan. i have mostly been talking about street repaving, and that is where the majority of the funds in the proposed bond measure will go, about $148 million. but we will also be spending $22 million on sidewalk excess ability improvements, which include 1900 new curb ramps citywide, 125,000 square feet of new sidewalk that is the responsibility of the city.
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these are sidewalks that front public property or have been damaged by the city's street trees. we will be putting $7.3 million toward needed rehabilitation and repair of our street structures, such as bridges, guard rails, tunnels, retaining walls, stairs, viaducts. $50 million for city implementation bicycle and streetscape improvements, such as countdown lighting, sidewalk extensions, bicycle improvements, tree planting, blub outs, and landscaping. finally, street traffic infrastructure improvements to reduce traffic time and improve transit reliability. again, this is a capital investment in the streets.
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muni is funding several later its vehicle procurement, and the kind of on board, mobile equipment that is required to make the entire transit effectiveness program work. that on board equipment would not be eligible for general obligation bond funding, but they do have sources to cover those projects. >> on -- supervisor chu: on these categories, can you explain to me, on the streetscape, bicycle, landscaping improvements, $50 million, as well as the transit straight signal infrastructure -- why doesn't make sense to put all of these into a string of effort -- resurfacing bond? >> let me say first the streetscape,